I cannot find a specific one John's referring to, but I did find this fascinating chart at SteveBlank.com:

Reminds me of one of my favorite charts, The Creative Process:

that is one of my favorite charts, too. thank you, adam

I agree. Example: @davemcclure is the "Sith Lord" of 500 Startups.

Here's his take on lean startups and angels:

In discussing the lean start-up model on the panel, McClure said, "With seed investments, we're able to test for the entrepreneur's learning behavior quickly…so we're learning about them before we invest further. Lean means shorter cycle time, less money raised, which limits the entrepreneurs time for experimentation." Also, employing his own special breed of VC vernacular, he said: "We can identify if they're doing stupid shit and they can fail on a smaller budget."

I'm guessing a lot of angels share Dave's point of view: that lean startups only need a small amount of money to test their hypothesis, and angels use knowledge of the entrepreneurs' behavior to determine if they want to re-up on pivot.

Adam, I agree learning behavior is a key component in early stage success. But I'm curious where we're in the transition from a executive summary and pitch deck being replaced by a business model canvas and interview results. These are a lean forward tools vs pitch deck which is lean back - makes me wonder if angels are going to resist... Guess that's a measure of the angel.

@Jason, no. There's no URL, just a spark for a conversation.

Most angels I've met don't want a pitch deck. They prefer a working prototype.

And then they want to discuss business models.

To be honest, I haven't noticed any particular Angel "assessment methodologies" so to say they are behind the times would be a bit superfluous to noting that there are no assessment methodologies. Although their non-existent methods are of course very rigorous.

I think you're under the mistaken impression that most Angels are in it for the ROI and have consequently put in a lot of effort and thought into figuring out an investment strategy.

I'm going to go out on a limb here and say that Angels are in it to help people, to feel like they're an entrepreneur and experience the highs without experiencing the devastating day to day of it, to "pay back" the ecosystem, and to hang out with who they think are awesome people.

All in all, angel investing is a lifestyle.

Startups are a lifestyle product like cigarettes, Macs, and Fox News.

Yes, there are value propositions in there, but the really kicker is the branding.

As Tristan points out, angel investing is non-economic. VCs generally need at least $20 million per partner to support themselves; most angels are investing only a fraction of that amount, while spending nearly as much time on their craft.

I've made over 20 angel investments, and I know there are better ways to make money. But it is a fantastic lifestyle.

As for Lean Startup methodologies, they help angel investors by encouraging entrepreneurs to launch early and iterate often. Maybe some of the suckers look just at registrations or downloads, but I always focus on intensity of usage and conduct customer calls for due diligence. If angel investing were as easy as simply applying a computer formula, none of us would be necessary.

Interesting that you're more customer-focused, Chris.

The thing that Dave McClure said that struck me is that he likes to see how an entrepreneur behaves when they hit a wall and pivot. If he likes what he sees, he'll re-up.

Then again, he's not a typical angel investor because he is in it for the ROI, not the lifestyle.

Is Dave an angel if he has a fund backing him?

He certainly *is* developing a more rigorous methodology and I've seen hints of the dashboard system they are developing for 500. But that sort of quantitative analysis is made possible by investing in boatloads of startups thanks to a large fund.

Now that I think about it, that is of course why most Angels can't have a rigorous methodology. Not enough data.

Not sure I agree that Angels don't have enough data. Just because an Angel passes on investing in a company doesn't mean he didn't evaluate the deal and can effectively use it as a data point when he learns whether it was right or wrong after the fact. When I was in the VC business, I made 8 investments but still feel like I saw about 1000 data points from which to judge my results.

As Chris noted, there has to be some qualitative analysis to supplement the data. The gets to my bigger criticism of the lean startup methodology which is that it is really effective as a tactic, far less so as a strategy.

Jonathan, while I don't see it as a criticism, I think you said one of the more interesting things I've heard said about lean startup methodologies. I agree it's more effective as a tactic and less as a strategy - which to me points out a trap that less experienced entrepreneurs can fall into.

While simply "doing what it says in the book" is probably better than not, it's certainly not the whole picture.

Dave's fund has deeper pockets than I; I can't afford too many pivots!